Power Integrations’ GAN and Data Center Timelines Don’t Match in 2026 Q2 Earnings Call

Date of Call: Aug 5, 2026

Financials Results

• Revenue: $118.9M, up 3% YOY and up 10% sequentially
• EPS: 37 cents per diluted share, up from 25 cents in the prior quarter
• Operating Margin: 17.1% (non-GAAP), up 540 basis points sequentially and up 10% from the prior year

Guidance:

• Revenue for Q3 expected to be between $122M and $130M, a 6% sequential increase at the mid-point.
• Non-GAAP growth margin for Q3 expected to be in a range of 54% to 55%, near the top end of the target range.
• Non-GAAP operating expenses for Q3 expected to be in a range of $45M to $46M, a slight increase from Q2 but below the prior year.
• Non-GAAP operating margin for Q3 expected to be between 17% and 19%, compared to 17.1% in Q2.

Business Commentary:

Revenue and Operating Margin Growth:

• Power Integrations reported Q2 revenue of $119 million, up 10% from the prior quarter, with sequential improvement across all four end market categories. Non-GAAP operating margin expanded by more than 5 percentage points to 17.1%.
• The growth was driven by better mix with industrial segment rising to 43% of sales, higher volume, and favorable yen-dollar exchange rate impacts.

Data Center and Automotive Market Potential:

• The company highlighted a projected billion-dollar data center SAM by 2030, with significant opportunities in main power paths and auxiliary power supplies.
• Growth is driven by rising power demands and the adoption of higher voltage architectures in data centers, alongside automotive revenue, which is on track to double in 2026, benefiting from increased BOM expansion in EVs.

Innovation in High-Voltage GaN Technology:

• Power Integrations demonstrated its 2200-volt PowiGAN technology, extending application spaces traditionally served by silicon carbide.
• This innovation reinforces the company's leadership in high-voltage GaN and provides a long-term pathway for data center and automotive customers, addressing rising voltage and power level requirements.

Supply Chain and Market Position:

• The company's unique supply chain structure allows for competitive lead times and ability to serve upside demand, potentially providing a market advantage.
• This capability was acknowledged by a hyperscaler customer and positions Power Integrations to capitalize on opportunities in high-voltage semiconductor technology as demand increases.

Sentiment Analysis:

Overall Tone: Positive

• 'It was a strong quarter' and 'demonstrate our ability to deliver profitable growth'. CEO states 'we are encouraged by the progress we've made this year, reflected in stronger financial performance, continued momentum across our industrial business, and meaningful advances in our strategic growth initiatives.' The company is 'excited about the direction markets are heading' and believes 'our technology, expertise, and products position us well for the opportunities ahead.'

Q&A:

• Question from David Williams (Needham & Co.): Could you give color on the 2200 volt GAN technology regarding when it could start producing revenue and if it's part of potential designs now?
  Response: It is currently a technology demonstration, not a product. Revenue is not expected for the next couple of years, with products on the 1500 volt roadmap being more relevant for the data center market.

• Question from David Williams (Needham & Co.): What are you seeing in terms of order velocity and channel inventory health?
  Response: Channel inventory is at healthy levels around 7.3 weeks. Demand in the first half has been compelling, growth is expected in Q3, but the aim is to maintain channel inventory around the healthy range of eight weeks.

• Question from Torres-Vonberg (Stiefel): Can you update on the timeline for data center and automotive, specifically regarding data center becoming more material?
  Response: For automotive, the target is $100M revenue by 2029-2030 timeframe. For data center, aux power designs could generate revenue in 2028, while the main power path to the GPU is a longer-term opportunity.

• Question from Torres-Vonberg (Stiefel): Does the 2200-volt GAN technology improve your position for winning 800-volt designs?
  Response: Yes, having a roadmap and track record in high-voltage innovation helps partners address current and future power challenges, positioning the company well for design wins.

• Question from Christopher Roland (Susquehanna): Can you talk about your supply chain capacity and ability to serve upside, and if competitors are running into supply issues?
  Response: The company believes its unique supply chain structure and ability to maintain competitive lead times present an opportunity, especially as they engage with customers on technology roadmaps.

• Question from Christopher Roland (Susquehanna): Have you explored using 2200-volt GAN for solid-state transformers (SSTs), and what new applications could it open?
  Response: Discussions to date have focused on gate driver products for SSTs. The 2200-volt technology is seeing interest in data center and automotive applications, with potential for new applications as markets evolve.

Contradiction Point 1

Revenue Timeline for 2200-Volt GaN Technology

Contradiction on when 2200-volt GaN will generate meaningful revenue.

David Williams (Needham & Co.) - David Williams (Needham & Co.)

2026Q2: The 2200-volt GaN is currently a technology demonstration, not a product, and is not expected to generate meaningful revenue in the next couple of quarters. - Jen Lloyd(CEO)

"When could the 2200-volt GaN technology start generating revenue, and is it currently part of potential designs or still a few quarters away?" - Ross Seymore (Deutsche Bank)

20260206-2025 Q4: GaN is already meaningful, having grown 40% in 2025. - Jennifer Lloyd(CEO)

Contradiction Point 2

Timeline for High-Voltage GaN Product Readiness

Contradiction on when 1500-volt node products will materialize.

David Williams (Needham & Co.) - David Williams (Needham & Co.)

2026Q2: products on the 1500-volt node likely to materialize in several years. - Jen Lloyd(CEO)

When could the 2200-volt GaN technology start generating revenue, and is it currently in potential designs or still a few quarters away? - Ross Seymore (Deutsche Bank)

2026Q1: High-voltage opportunities (800V architecture) are longer-term, expected in a couple of years. - Jen Lloyd(CEO)

Contradiction Point 3

Characterization of Data Center Opportunity Timeline

Contradiction in describing the immediacy of main power path opportunities.

What are Torres-Vonberg (Stiefel)'s earnings results? - Torres-Vonberg (Stiefel)

2026Q2: Main power path to GPU... is further out, dependent on customer engagement and 800-volt system deployments. - Jen Lloyd(CEO)

Could you provide an update on the timeline for data center and automotive markets, specifically regarding the materiality of data center revenue in 2028 and expectations for automotive revenue in 2027? - Christopher Rolland (Susquehanna)

2026Q1: Engagement in AI/data center opportunities is going great. The company's high-voltage GaN technology is seeing strong demand for 800-volt architectures. There is interest across the entire data center ecosystem... as new 800V systems come online in a couple of years. - Jen Lloyd(CEO)

Contradiction Point 4

Timeline for Material Data Center Revenue

Contradiction on when data center revenue will become significant.

Torres-Vonberg (Stiefel) - Torres-Vonberg (Stiefel)

2026Q2: Automotive... is on track to double revenue in 2026... Data center... could generate revenue in 2028. - Jen Lloyd(CEO)

Could you update on the timeline for data center and automotive markets, particularly data center revenue materiality in 2028 and automotive revenue expectations in 2027? - Ross Seymore (Deutsche Bank)

20260206-2025 Q4: Data center is the longest-term play... won't be material for a couple of years. - Jennifer Lloyd(CEO)